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On January 1 20X1 Fern Corporation paid Morton Advertising $116200 to acquire 70 percent of Vincent Company

On January 1, 20X1, Fern Corporation paid Morton Advertising $116,200 to acquire 70 percent of Vincent Company s stock. Fern also paid $45,000 to acquire $50,000 par value 8 percent, 10-year bonds directly from Vincent on that date. Interest payments are made on January 1 and July 1. The fair value of the noncontrolling interest at January 1, 20X1, was $49,800, and book value of Vincent s net assets was $110,000. The book values and fair values of Vincent s assets and liabilities were equal except for buildings and equipment, which had a fair value $56,000 greater than book value and a remaining economic life of 14 years at January 1, 20X1. The trial balances for the two companies as of December 31, 20X3, are as follows:  On July 1, 20X2, Vincent sold land that it had purchased for $17,000 to Fern for $25,000. Fern continues to hold the land at December 31, 20X3. Assume Fern Corporation uses the fully adjusted equity method. Required a. Record the journal entries for 20X3 on Fern s books related to its investment in Vincent s stock and bonds. b. Record the entries for 20X3 on Vincent s books related to its bond issue. c. Prepare elimination entries needed to complete a consolidation worksheet for 20X3. d. Prepare a three-part consolidation worksheet for20X3.

Apr 24 2020 View more View Less

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